Open letter to Senator Sanders and the Democratic leadership
RE: Strategic advice on health care
Play offense, not defense
A proposal for a winning political strategy
First step in an offensive strategy
Admit the ACA fell short as it relied on the private market to lower costs. The ACA was designed to make the market more competitive, efficient and less costly, this has not happened. The massive bureaucracy of the private insurance market and lavish expenditures on advertising continues to waste billions of dollars. A significant majority of Americans rejected two GOP plans that promote the lie a market approach will reduce costs and cover more people. It is time to move beyond ACA and the GOP’s cynical manipulation and get behind single-payer, national health insurance as envisioned in House Bill 676, the Expanded and Improved Medicare for All Act. The government’s Medicare system has a 52-year track record that demonstrates single-payer works.
Second step in offense
Announce a goal of fully implementing national health insurance within 5 years of passage that will to provide comprehensive, medical, dental and eye care for all. No hassles, no worries, better care and for less cost to the nation. Encourage Democratic candidates to commit to single-payer in 2018 elections and beyond. Lawmakers who won’t, should be voted out.
Third step
Immediately author separate legislation that would lower Medicare eligibility to age 55 within one year of passage. A one page bill will do. Close the drug benefit “donut hole” for retirees by forcing pharmaceutical makers to the negotiating table. Trump should be challenged to use his much-vaunted negotiating skills to get this done. Democratic lawmakers should break their ties to drug firm’s political donations.
Lowering the Medicare age would help mitigate the opposition of a large section of voters. A slight majority of voters over 55 voted for Trump. Implementing such an easily administered program will garner support for single-payer. Medicare, is a single-payer system, a popular government program and has a proven track record.
Fourth step
Propose a two-year freeze on Medicaid and Medicare funding and administrative rules as provided by the ACA to buy time for discussion and debate on next steps. No cuts. Polls indicate his idea should receive broad public support. Short falls in funding these programs should come from an excess profits tax on health care insurers. About 50 percent of their revenue is transfer payments from federal, state and county governments. The rest comes from workers’ pockets through premiums and co-insurance payments. Why should government and workers’ resources go to pay dividends to stockholders, instead of providing health care? Raising taxes on the wealthy would also be a popular solution to cover short falls.
Fifth step
Assure workers in the insurance industry they will be taken care of as the nation transitions to single-payer. They will not be made jobless. Those not needed for single-payer administration will be retrained and given stipends and free educational benefits modeled after the spirit of the GI bill. No one will be left behind.
Sixth step
Introduce legislation to implement Bernie Sanders campaign’s social benefit programs as listed below. Sanders acknowledged these are far below that of peer nations, but would be a start. American workers have the least social benefits among industrial nations. It is time to catch up. This raises the ante at the bargaining table with corporations and the wealthy that oppose health care for all. The underlying message, we are serious. No more half-measures.
- Free post-secondary education.
- 12 weeks of paid parental or medical leave.
- Minimum of 10 days paid vacation and seven sick days.
And lastly, step seven
Stipulate that single payer be implemented in steps to transition insurers out of business and restructure health care insurance as a human right on a non-profit basis.
Articulate to the public a clear transition scenario, for example: Structure and prepare the Medicare system to administer a single-payer program within 5 years of passage of the bill. At year three, Medicare would begin pilot programs insuring those 50 to 55 to ensure systems and policies are working. Evaluate and change and amend as needed. At year 5, single-payer goes into effect for all. All in, all pay a fair share, no worries, no hassle, quality health care. Your health care starts when you are born.
A historic opportunity to lead
Many Trump voters believed he was going to get everyone health care. Clearly, Trump and the GOP will not. If Democrats want to win them over, get them health care! White working class voters, who voted for Trump, will overwhelmingly support an approach like that outlined here. Offense will capture the public’s attention. It will engage Sanders supports and youth to get behind a real solution to the nation’s health care crisis.
Organizing to stop the GOP legislation is defense and offers nothing to solve the crisis. Make a commitment to single-payer. This is the historic opportunity to lead. Playing defense is a losing game. It is time, past time, to go on the offensive.
My best regards,
Wayne Nealis
Writer and long-time single payer activist in Minneapolis, Minnesota
Contact info: Wayne Nealis
Email: wynnls@hotmail.com
Open letter to Senator Sanders and the Democratic leadership
RE: Strategic advice on health care
Play offense, not defense
A proposal for a winning political strategy
First step in an offensive strategy
Admit the ACA fell short as it relied on the private market to lower costs. The ACA was designed to make the market more competitive, efficient and less costly, this has not happened. The massive bureaucracy of the private insurance market and lavish expenditures on advertising continues to waste billions of dollars. A significant majority of Americans rejected two GOP plans that promote the lie a market approach will reduce costs and cover more people. It is time to move beyond ACA and the GOP’s cynical manipulation and get behind single-payer, national health insurance as envisioned in House Bill 676, the Expanded and Improved Medicare for All Act. The government’s Medicare system has a 52-year track record that demonstrates single-payer works.
Second step in offense
Announce a goal of fully implementing national health insurance within 5 years of passage that will to provide comprehensive, medical, dental and eye care for all. No hassles, no worries, better care and for less cost to the nation. Encourage Democratic candidates to commit to single-payer in 2018 elections and beyond. Lawmakers who won’t, should be voted out.
Third step
Immediately author separate legislation that would lower Medicare eligibility to age 55 within one year of passage. A one page bill will do. Close the drug benefit “donut hole” for retirees by forcing pharmaceutical makers to the negotiating table. Trump should be challenged to use his much-vaunted negotiating skills to get this done. Democratic lawmakers should break their ties to drug firm’s political donations.
Lowering the Medicare age would help mitigate the opposition of a large section of voters. A slight majority of voters over 55 voted for Trump. Implementing such an easily administered program will garner support for single-payer. Medicare, is a single-payer system, a popular government program and has a proven track record.
Fourth step
Propose a two-year freeze on Medicaid and Medicare funding and administrative rules as provided by the ACA to buy time for discussion and debate on next steps. No cuts. Polls indicate his idea should receive broad public support. Short falls in funding these programs should come from an excess profits tax on health care insurers. About 50 percent of their revenue is transfer payments from federal, state and county governments. The rest comes from workers’ pockets through premiums and co-insurance payments. Why should government and workers’ resources go to pay dividends to stockholders, instead of providing health care? Raising taxes on the wealthy would also be a popular solution to cover short falls.
Fifth step
Assure workers in the insurance industry they will be taken care of as the nation transitions to single-payer. They will not be made jobless. Those not needed for single-payer administration will be retrained and given stipends and free educational benefits modeled after the spirit of the GI bill. No one will be left behind.
Sixth step
Introduce legislation to implement Bernie Sanders campaign’s social benefit programs as listed below. Sanders acknowledged these are far below that of peer nations, but would be a start. American workers have the least social benefits among industrial nations. It is time to catch up. This raises the ante at the bargaining table with corporations and the wealthy that oppose health care for all. The underlying message, we are serious. No more half-measures.
- Free post-secondary education.
- 12 weeks of paid parental or medical leave.
- Minimum of 10 days paid vacation and seven sick days.
And lastly, step seven
Stipulate that single payer be implemented in steps to transition insurers out of business and restructure health care insurance as a human right on a non-profit basis.
Articulate to the public a clear transition scenario, for example: Structure and prepare the Medicare system to administer a single-payer program within 5 years of passage of the bill. At year three, Medicare would begin pilot programs insuring those 50 to 55 to ensure systems and policies are working. Evaluate and change and amend as needed. At year 5, single-payer goes into effect for all. All in, all pay a fair share, no worries, no hassle, quality health care. Your health care starts when you are born.
A historic opportunity to lead
Many Trump voters believed he was going to get everyone health care. Clearly, Trump and the GOP will not. If Democrats want to win them over, get them health care! White working class voters, who voted for Trump, will overwhelmingly support an approach like that outlined here. Offense will capture the public’s attention. It will engage Sanders supports and youth to get behind a real solution to the nation’s health care crisis.
Organizing to stop the GOP legislation is defense and offers nothing to solve the crisis. Make a commitment to single-payer. This is the historic opportunity to lead. Playing defense is a losing game. It is time, past time, to go on the offensive.
My best regards,
Wayne Nealis
Writer and long-time single payer activist in Minneapolis, Minnesota
Email: wynnls@hotmail.com
Health Care Overhaul Collapses as Two Republican Senators Defect
by Thomas Kaplan - NYT - July 17, 2017
WASHINGTON — Two more Republican senators declared on Monday night that they would oppose the Senate Republican bill to repeal the Affordable Care Act, killing, for now, a seven-year-old promise to overturn President Barack Obama’s signature domestic achievement.
The announcement by the senators, Mike Lee of Utah and Jerry Moran of Kansas, left their leaders at least two votes short of the number needed to begin debate on their bill to dismantle the health law. Two other Republican senators, Rand Paul of Kentucky and Susan Collins of Maine, had already said they would not support a procedural step to begin debate.
With four solid votes against the bill, Republican leaders now have two options.
They can try to rewrite it in a way that can secure 50 Republican votes, a seeming impossibility at this point, given the complaints by the defecting senators. Or they can work with Democrats on a narrower measure to fix the flaws in the Affordable Care Act that both parties acknowledge.
Senator Mitch McConnell, the Republican leader, conceded Monday night that “the effort to repeal and immediately replace the failure of Obamacare will not be successful.” He outlined plans to vote now on a measure to repeal the Affordable Care Act, with it taking effect later. That has almost no chance to pass, however, since it could leave millions without insurance and leave insurance markets in turmoil.
But President Trump was not ready to give up. He immediately took to Twitter to say: “Republicans should just REPEAL failing ObamaCare now & work on a new Healthcare Plan that will start from a clean slate. Dems will join in!”
In announcing his opposition to the bill, Mr. Moran said it “fails to repeal the Affordable Care Act or address health care’s rising costs.”
“There are serious problems with Obamacare, and my goal remains what it has been for a long time: to repeal and replace it,” he said in a statement.
In his own statement, Mr. Lee said of the bill, “In addition to not repealing all of the Obamacare taxes, it doesn’t go far enough in lowering premiums for middle-class families; nor does it create enough free space from the most costly Obamacare regulations.”
By defecting together, Mr. Moran and Mr. Lee ensured that no one senator would be the definitive “no” vote.
House Republicans, after their own fits and starts, passed a bill to repeal the Affordable Care Act in May, a difficult vote that was supposed to set the stage for Senate action. But with conservative and moderate Republicans so far apart in the Senate, the gulf proved impossible to bridge. Conservatives wanted the Affordable Care Act eradicated, but moderates worried intensely about the effects that would have on their most vulnerable citizens.
The Senate Democratic leader, Chuck Schumer of New York, responded to the announcement on Monday by urging his Republican colleagues to begin anew and, this time, undertake a bipartisan effort.
“This second failure of Trumpcare is proof positive that the core of this bill is unworkable,” Mr. Schumer said. “Rather than repeating the same failed, partisan process yet again, Republicans should start from scratch and work with Democrats on a bill that lowers premiums, provides long-term stability to the markets and improves our health care system.”
Roughly 20 million people have gained coverage through the Affordable Care Act. Repealing the law was a top priority for Mr. Trump and Republicans in Congress, who say it has driven up premiums and forced consumers to buy insurance they do not want and cannot afford.
The opposition from Mr. Paul and Ms. Collins to the latest version of the Senate bill was expected, so Mr. McConnell had no margin for error as he unveiled it. But he managed to survive through the weekend and until Monday night without losing another of his members — though some expressed misgivings or, at the very least, uncertainty.
Mr. McConnell had wanted to hold a vote this week, but he was forced to abandon that plan after Senator John McCain, Republican of Arizona, had surgery last weekto remove a blood clot from above his left eye. That unexpected setback gave the forces that opposed the bill more time to pressure undecided senators.
Already, Mr. McConnell was trying to sell legislation that was being assailed from many directions. On Friday, the health insurance lobby, which had been largely silent during the fight, came off the sidelines to blast as “unworkable” a key provision allowing the sale of low-cost, stripped-down health plans, saying it would increase premiums and undermine protections for people with pre-existing medical conditions.
Mr. McConnell has now failed twice in recent weeks to roll out a repeal bill and keep his conference together for it. He first wanted to hold a vote in late June, only to reverse course after running into opposition.
House Republicans in competitive districts who supported their version of the bill will now have to explain themselves — and Democrats are eager to pounce.
“Make no mistake, Paul Ryan can’t turn back time and undo the damaging vote he imposed on his conference,” said Meredith Kelly, a spokeswoman for the Democratic Congressional Campaign Committee. “House Republicans all own a bill that would strip health care from 23 million Americans and raise costs for millions more, and it will haunt them in 2018.”
Mr. Lee, one of the most conservative members of the Senate, was part of a group of four conservative senators who came out against the initial version of Mr. McConnell’s bill after it was unveiled last month. He then championed the proposal to allow insurers to offer cheap, bare-bones plans, which was pushed by another of those opponents, Senator Ted Cruz of Texas. But the language ultimately added was not quite what Mr. Lee had been advocating, a spokesman said last week. .
Mr. Moran, a reliable Republican vote and a past chairman of the Senate Republicans’ campaign arm, had announced his opposition to the bill as drafted after Mr. McConnell scrapped plans to hold a vote in late June. He expressed concernsabout how it would affect Kansas, including whether it would limit access to health care in rural communities and effectively penalize states, like his, that did not expand Medicaid under the Affordable Care Act.
The pressure on Mr. Moran at home showed no sign of relenting. The Kansas Hospital Association said last week that the revised Senate bill “comes up short, particularly for our most vulnerable patients.”
Old Truth Trips Up G.O.P. on Health Law: A Benefit Is Hard to Retract
by Jennifer Steinhauer - NYT - July 17, 2017
WASHINGTON — In the end, Republicans relearned a lesson that has bedeviled them since the New Deal: An American entitlement, once established, can almost never be retracted.
Since the day the Affordable Care Act passed Congress, Republicans have vowed to overturn it. In the beginning, many voters were with them, handing the Republican Party some of the tools: a sweeping rejection of House Democrats in 2010 — a rejection of government reach — followed by the Senate in 2014.
But in the intervening years, as millions of Americans have become insured under the law that was derisively tagged with President Barack Obama’s name, the health care program has become more and more popular, even with Republican governors.
In red states where Mr. Obama and Democrats remain highly unpopular, the law’s reach into American lives could not be denied. This was true for communities ravaged by the opioid crisis, which health care money helped treat; for rural states where hospitals had become all but dependent on increased Medicaid payments that covered the bulk of their patients; and for poor constituents with chronic medical conditions who had come to take it as an article of faith that their insurance companies could not deny them coverage for pre-existing conditions.
Senator Susan Collins, Republican of Maine, said she was besieged by constituents who urged her to oppose the Republican plan: a conservative Republican who was worried about the impact on her grandson, who has cystic fibrosis; a small-business owner in a town where the hospital depends on Medicaid for more than 60 percent of its revenues and is the second-largest employer; a working single mother and her 9-year-old daughter who, for the first time in the girl’s life, were both able to get affordable insurance.
Congressional Republicans, emboldened by their narrow majority, pushed their luck from Day 1. Not content simply to pull apart the health care law, they took the repeal efforts as a license to make broad-based changes to Medicaid, with provisions that would have capped spending annually and ended the open-ended entitlement for the poor after 50 years, without so much as a public hearing. This was a bridge too far for moderate Republicans and those from states where the party commands fierce loyalty but where poor residents benefit in some form from the law.
Republicans had a math problem on both ends.
On the right, senators like Rand Paul of Kentucky and Mike Lee of Utah were going to be satisfied only with a bill that repealed the Affordable Care Act in its entirety.
But senators from states that had expanded their Medicaid programs — like Shelley Moore Capito of West Virginia, Rob Portman of Ohio and Lisa Murkowski of Alaska — had to contend with alarmed governors and other state officials who faced the choice of leaving constituents uncovered or raising taxes to extend their insurance. Attempts to mollify them were largely unsuccessful: Ms. Murkowski, for example, was awarded a special provision to compensate for the expected explosion of premiums in her state. But this concession also exposed her to potential criticisms of legislative kickbacks.
The process itself was not helpful. Senator Mitch McConnell of Kentucky, the majority leader, tried to work with a select group of senators who largely represented a conservative view. But without hearings, committee work or a public drafting of the bill — all marks of the original health care law — members on both sides of the divide felt bruised and left out.
Congressional Republicans got little help from the White House, which was at turns disengaged and counterproductive. White House officials and many Republicans seemed to be more dedicated to their true love, changes to the tax system, than to their flirtation with health care.
There was no attempt to work with Democrats, who had no intention of repealing the law. Yet this left Republicans unable to alternately woo or terrify red-state Democrats into lending a helping hand.
Now, it is likely they have no choice. Republicans will probably have to do what Mr. McConnell predicted earlier this month: offer an olive branch and work quickly with Democrats to shore up ailing online health care marketplaces. From there, members of both parties have said they want to tweak the existing law to help small businesses and reduce premiums.
But until then, the health program known as Obamacare remains the law of the land.
Is Trumpcare finally dead?
by Jennifer Rubin - Washington Post - July 17, 2017
Senate Majority Leader Mitch McConnell (R-Ky.) delayed a vote on a bill to repeal and replace Obamacare until Sen. John McCain (R-Ariz.) recovers from surgery.(Photo: Jahi Chikwendiu/Reuters)
Perhaps the two “no” votes from Sens. Susan Collins (R-Maine) and Rand Paul (R-Ky.) would have been enough to sink the GOP health-care effort. Senate Republicans and virtually all political watchers have been cultivating a sense of suspense — who would be the third “no” vote? — when in fact there are likely, according to Collins, many more “no” votes (eight to 10, she said in TV interviews Sunday). Then a very public and simple barrier to passage emerged — Sen. John McCain’s (R-Ariz.) undetermined recuperation time. With two “no” votes already clinched, Senate GOP leaders could not even pretend to have sufficient support without McCain (who actually might be a “no” vote in the end). Now comes perhaps the death knell for Trumpcare: Sens. Mike Lee (R-Utah) and Jerry Moran (R-Kan.) both announced their opposition Monday night.
To be clear, the Better Care Reconciliation Act was already at death’s door before McCain took ill and before Lee and Moran’s announcements. A handful of moderates continue to refuse to stomach huge Medicaid cuts. In an act of exceptional duplicity, McConnell reportedly told moderates not to worry about Medicaid cuts (presumably because Congress will never have the nerve to go through with them), which understandably angered conservatives.
Republican Sen. Ron Johnson told a Wisconsin paper, “I am concerned about Leader McConnell’s comments to apparently some of my Republican colleagues — ‘Don’t worry about some of the Medicaid reforms, those are scheduled so far in the future they’ll never take effect.’ I’ve got to confirm those comments. … I think those comments are going to really put the motion to proceed in jeopardy, whether it’s on my part or others.” He continued: “Many of us, one of the main reasons we are willing to support a bill that doesn’t even come close to repealing Obamacare … was because at least we were devolving the management back to the states, and putting some level of sustainability into an unsustainable entitlement program. If our leader is basically saying don’t worry about it, we’ve designed it so that those reforms will never take effect, first of all, that’s a pretty significant breach of trust, and why support the bill then?”
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Additional time has never been an asset for the administration. The more time that passes, the more anger Team Trump seems to induce in wavering members. CNN reported:
[Vice President] Pence and top Medicare and Medicaid administrator Seema Verma were deployed to Rhode Island over the weekend to meet with skeptical governors at the National Governors Association’s summer meeting. In private meetings, Pence and Verma tried to convince governors that the GOP’s health care bill would give them greater flexibility to design Medicaid programs that were better tailored to their needs.But the weekend didn’t go especially well for the administration. After a speech in which Pence claimed 60,000 disabled Ohioans were waiting to get care, a spokesman for Ohio Republican Gov. John Kasich dismissed the claim as false on Twitter.[Connecticut Democratic Gov. Dan] Malloy described Pence’s private meeting with the governors Saturday as “pretty atrocious” as Pence encouraged governors to dismiss an unfavorable score from the Congressional Budget Office that showed 15 million Americans would lose Medicaid coverage over the next decade.
And of course the Congressional Budget Office’s scoring on the newest version of the bill has yet to come out. Each time the CBO has produced a score, decried as fake by the White House, a spasm of concern has gripped the Republican caucus. Republicans get cold(er) feet with each reminder of how many people will lose insurance, be cut off from Medicaid and/or have to pay more for coverage. On the floor of the Senate, Minority Leader Charles E. Schumer (D-N.Y.) needled Republicans, imploring them to use the time to secure a CBO score and to hold hearings on the bill. (He told Republicans they should “use this extra week, or extra weeks, to do what Republicans should have done a long time ago: hold public hearings. Allow the stakeholders to come in and express their concerns.” That idea likely sends shivers down the spines of most Republicans as they contemplate the parade of doctors, patients, insurers, advocates for the elderly and other witnesses who would come forward.)
In sum, given the choice between holding up the Senate until McCain returns and changing at least two of the declared “no” votes, or moving on so as to avoid the agony of extended dismal coverage and the humiliation of a losing vote on the floor, wouldn’t Republicans rather proceed to the debt limit, the budget and tax reform? Let’s be candid: McConnell knows that forcing some of his members (especially Dean Heller of Nevada) to vote in support of a grossly unpopular bill would be a political death sentence. He cannot in his heart of hearts be thrilled with the prospect of a vote, especially one he will now almost certainly lose; all he need to do is show he tried everything possible.
Initially, McConnell may have figured a ridiculously early deadline for a vote in July could have cleared the decks (win or lose), but now he has a ready-made excuse for ditching the whole exercise. Sure, they can come back to the bill — sometime. Gosh, if only McCain hadn’t gotten ill. Well, now we’ve got four “no” votes. Let a hundred excuses bloom.
UPDATE: McCain has now chimed in with what amounts to a 5th “no” vote. In a written statement he declares, “One of the major problems with Obamacare was that it was written on a strict party-line basis and driven through Congress without a single Republican vote. As this law continues to crumble in Arizona and states across the country, we must not repeat the original mistakes that led to Obamacare’s failure.” He urges Congress to “return to regular order, hold hearings, receive input from members of both parties, and heed the recommendations of our nation’s governors so that we can produce a bill that finally provides Americans with access to quality and affordable health care.”
‘Plan C’ on Obamacare, Repeal Now and Replace Later, Has Collapsed
by Thomas Kaplan - NYT - July 18, 2017
WASHINGTON — With their bill to repeal and replace the Affordable Care Act in tatters, Senate leaders on Tuesday pushed to vote on a different measure that would repeal major parts of President Barack Obama’s health law without a replacement — but that plan appeared also to collapse.
Senators Susan Collins of Maine, Shelley Moore Capito of West Virginia and Lisa Murkowski of Alaska, all Republicans, immediately declared they could not vote to repeal the Affordable Care Act without a replacement — enough to doom the effort before it could get any momentum.
“I did not come to Washington to hurt people,” Ms. Capito said in a statement. “I cannot vote to repeal Obamacare without a replacement plan that addresses my concerns and the needs of West Virginians.”
Senator Rob Portman of Ohio hinted strongly that he too would oppose it.
The collapse of the Senate Republican health bill — and the failing struggle to find yet another alternative — highlighted a harsh reality for Senate Republicans: While Republican senators freely assailed the health law while Mr. Obama occupied the White House, they have so far not been able to come up with a workable plan to unwind it that would keep both moderate Republicans and conservatives on board.
By midday Tuesday, the Republican Party’s seven-year-old promise to repeal the Affordable Care Act appeared broken. At the White House, President Trump said his plan was now “to let Obamacare fail,” suggesting Democrats would then seek out Republicans to work together on a health measure.
“It will be a lot easier,” Mr. Trump said, adding, “We’re not going to own it. I’m not going to own it. I can tell you the Republicans are not going to own it. We’ll let Obamacare fail and then the Democrats are going to come to us.”
Senator Mitch McConnell of Kentucky, the majority leader, gamely pressed forward on Tuesday even as the ground was giving way beneath him.
“I regret that the effort to repeal and immediately replace the failures of Obamacare will not be successful,” Mr. McConnell said on the Senate floor on Tuesday morning. “That doesn’t mean we should give up. We will now try a different way to bring the American people relief from Obamacare. I think we owe them at least that much.”
On Capitol Hill, Republicans and Democrats alike were trying to make sense of the bill’s downfall — and what comes next. On Monday night, two Republican senators, Mike Lee of Utah and Jerry Moran of Kansas, came out in opposition to the bill, leaving Republican leaders at least two votes short of those needed to start debate on the measure.
Two other Republican senators, Ms. Collins and Rand Paul of Kentucky, affirmed their opposition to the measure last week, leaving Mr. McConnell with no room for error as he tried to move toward a vote.
Speaking on the Senate floor on Tuesday morning, Mr. McConnell laid out plans for a vote on a measure like the one vetoed by Mr. Obama in January 2016, which, Mr. McConnell said, would include a “repeal of Obamacare combined with a stable, two-year transition period.”
Under that bill, the Congressional Budget Office said, 18 million more people would be uninsured within a year, and 32 million fewer people would have coverage in 2026, compared with current law. Premiums, it said, would increase at least 20 percent in the first year and would double by 2026.
That bill would have eliminated the Affordable Care Act’s expansion of Medicaid and subsidies for the purchase of private insurance. But it would have left in place rules established by the Affordable Care Act that require insurers to provide specific benefits and prohibit insurers from denying coverage or charging higher premiums because of a person’s pre-existing medical conditions.
Those numbers apparently chased Ms. Murkowski away.
“There’s enough chaos and uncertainty already, and this would just contribute to it,” she said.
They also spooked a bipartisan group of 11 governors, led by John R. Kasich of Ohio, a Republican, and John W. Hickenlooper of Colorado, a Democrat, and including Gov. Brian Sandoval of Nevada, a key opponent of the repeal effort.
“The Senate should immediately reject efforts to repeal the current system and replace sometime later,” said the group, which consists of five Republicans, five Democrats and one independent. “This could leave millions of Americans without coverage. The best next step is for both parties to come together and do what we can all agree on: fix our unstable insurance markets.”
The statement was endorsed by the governors of Alaska, Louisiana, Maryland, Massachusetts, Montana, Nevada, Pennsylvania, Vermont and Virginia.
Republican leaders in Congress originally intended to proceed with a similar “repeal and delay” strategy in January. But Mr. Trump, among others, insisted that the repeal and replacement of the law be simultaneous.
It was unclear whether Mr. McConnell would even be able to clear a procedural hurdle to get to a vote on the repeal-only measure. He faced the same math problem as with his own bill: He can afford to lose only two Republican senators, with Vice President Mike Pence breaking the tie.
Not only has he apparently lost three, Senators Collins, Murkowski and Capito, but he must wait for the return of an ailing Senator John McCain, Republican of Arizona.
Ms. Collins said she would vote against the procedural step.
“I do not think that it’s constructive to repeal a law that is so interwoven within our health care system without having a replacement plan in place,” she said. “We can’t just hope that we will pass a replacement within the next two years. Repealing without a replacement would create great uncertainty for individuals who rely on the ACA and cause further turmoil in the insurance markets.”
Mr. Portman all but joined her.
“If it is a bill that simply repeals,” Mr. Portman said, “I believe that will add to more uncertainty, and the potential for Ohioans to pay even higher premiums, higher deductibles.”
Dr. David O. Barbe, the president of the American Medical Association, which opposed Mr. McConnell’s bill, urged lawmakers to pursue a bipartisan approach on health care, saying, “The status quo is unacceptable.”
The Senate Democratic leader, Chuck Schumer of New York, invited Republicans to work with Democrats to improve the health law. He warned that passing a repeal-only measure “would be a disaster,” saying it would cause millions of people to lose coverage and, in many ways, would be worse than Mr. McConnell’s original bill.
“It’s like if our health care system was a patient who came in and needed some medicine,” Mr. Schumer said. “The Republicans proposed surgery. The operation was a failure. Now Republicans are proposing a second surgery that will surely kill the patient.”
In Congress, Obstructionists Are Obstructing Themselves
by The Editorial Board - NYT - July 18, 2017
Republican legislative leaders are in a bind. While they appear to have failed for nowin their goal of destroying the Affordable Care Act, their eagerness to shower tax breaks on the wealthy at the expense of health coverage for millions of Americans has crimped their ability to pass other fiscal legislation.
This is not a lament. It’s just as well that they haven’t done anything big, given their goals. But it is a stunning demonstration of incompetence that, with control of the House, the Senate and the White House for six months, Republicans have not only failed to enact any major bills but have also created a legislative logjam that is bound to get worse.
This is largely because congressional leaders have tried to overcome solid Democratic opposition by using “reconciliation” rules — which prevent a Senate filibuster when applied to certain legislation on revenue, spending or the debt limit. But until the health care reconciliation measure is either passed or abandoned, they cannot use those rules to pass other legislation, like broad tax cuts for the wealthy that are a key element of their agenda.
With Senators Mike Lee of Utah and Jerry Moran of Kansas announcing their opposition to the health bill on Monday night, and with only two weeks before the summer break, passage of a bill that some Republicans believe would cut coverage too deeply and others believe would not cut taxes or benefits enough seemed doomed.
But Republican infighting and, by extension, legislative disarray won’t stop there. When Congress returns in September, lawmakers will have less than a month to pass budget bills before the 2018 fiscal year begins on Oct. 1. If they miss that deadline, they risk a government shutdown.
To complicate matters, soon after the next fiscal year starts, the debt ceiling will need to be raised, which will be a difficult vote for Republicans who have threatened in the past to default rather than approve more borrowing. During most of the Obama years, Republicans used legislative tactics to delay or block Democratic bills, precipitate government shutdowns over Democratic budgets and risk default rather than raise the debt limit in a timely way. Now they are in charge, and yet legislation is stalled, a shutdown may be impending and a raise in the debt ceiling is again in doubt.
After years spent as obstructionists, obstruction seems to be all they know. Now they’re obstructing themselves, a good thing since it may limit their ability to do harm.
Republicans Leap Into the Awful Known
by Paul Krugman - NYT - July 17, 2017
Sometime in the next few days the Congressional Budget Office will release its analysis of the latest version of the Republican health care plan. Senator Mitch McConnell is doing all he can to prevent a full assessment, for example by trying to keep the C.B.O. from scoring the Cruz provision, which would let insurers discriminate against people with pre-existing conditions. Nonetheless, everyone expects a grim prognosis.
As a result, White House aides are already attacking the C.B.O.’s credibility, announcing in advance that whatever it says will be “fake news.” So why should we believe the budget office, not the Trump administration? Let me count the ways.
First, this White House already has a record of constant, blatant lying about health care that is, as far as I can tell, without precedent in modern history. Just a few days ago, for example, Vice President Mike Pence made the completely false assertion that Ohio’s expansion of Medicaid led to a cutback in aid for the disabled — a lie that the state’s government had already refuted. On Sunday, Tom Price, the secretary of Health and Human Services, claimed that the Senate bill would cover more people than current law — another blatant lie. (You can’t cut hundreds of billions from Medicaid and insurance subsidies and expect coverage to grow!)
The point is that on this issue (and others, of course), the Trump administration and its allies have negative credibility: If they say something, the default assumption should be that they’re lying.
Second, the C.B.O. is hardly alone in its negative assessments of Republican health care plans. In fact, just about every group with knowledge of the issue has reached similar conclusions. In a joint letter, the two major insurance industry trade groups blasted the Cruz provision as “simply unworkable.” The American Academy of Actuaries says basically the same thing. AARP has condemned the bill, as has the American Medical Association.
Third, contrary to White House disinformation, the C.B.O. actually did a pretty good job of predicting the effects of the Affordable Care Act, especially when you bear in mind that the act was a leap into the unknown: We had very little experience of how an A.C.A.-type system would work.
True, the C.B.O. overestimated the number of people who would buy insurance on the exchanges the act created; but that was partly because it overestimated the number of employers who would drop coverage and send their workers to those exchanges. Overall gains in coverage have been reasonably well in line with what the C.B.O. projected — especially in states that expanded Medicaid and did their best to make the law work.
Finally — and this seems to me to be the most compelling argument of all — predicting the effects of destroying the A.C.A. is much easier than predicting the consequences when it was enacted, because what the Senate bill would do, pretty much, is return us to the bad old days. Or to put it another way, what McConnell and Senator Ted Cruz are selling is a giant leap into the known, taking us back to a system whose flaws are all too familiar from recent experience.
After all, before Obamacare, most states had more or less unregulated insurance markets, similar to those the Senate bill would create. Many of these states also had skimpy, underfunded Medicaid programs, which would be the effect of the bill’s brutal Medicaid cuts.
So while careful, nonpartisan modeling, the kind the C.B.O. excels in, is important, you don’t need a detailed analysis to know what American health care would look like if this bill passes. Basically, it would look like pre-A.C.A. Texas, where 26 percent of the nonelderly population was uninsured.
And lack of insurance wouldn’t be the only problem: Many people would have “junk insurance” — insurance with deductibles so large or coverage limitations so extensive as to be effectively useless when needed.
Now, some people might be satisfied with that outcome. Hard-core libertarians, for example, don’t believe making health care available to those who need it is a legitimate role of government; letting some citizens go bankrupt and/or die if they get sick is the price of freedom as they define it.
But Republicans have never made that case. Instead, at every stage of this political fight they have claimed to be doing exactly the opposite of what they’re actually doing: covering more people, making health care cheaper, protecting Americans with pre-existing conditions. We’re not talking about run-of-the-mill spin here; we’re talking about black is white, up is down, dishonesty so raw it’s practically surreal. This isn’t just an assault on health care, it’s an assault on truth itself.
Will this vileness prevail? Your guess is as good as mine about whether Mitch McConnell will hold on to the 50 senators he needs. But the mere possibility that this much cruelty, wrapped in this much fraudulence, might pass is a horrifying indictment of his party.
Joe Biden: Americans decided health care is for all. The GOP wants to roll that back.
by Joe Biden - Washington Post - July 17, 2017
As vice president, I met with Americans all across our country. What they told me over and over is that the Affordable Care Act gave them peace of mind — that if they got sick, or if their child got sick, they could get care and not have to worry about going broke as a result. They no longer had to lay awake at night wondering: Can I pay for this treatment? What happens if she gets cancer? How will I feed my family and afford the care?
They told me that because when the ACA became law and health-care coverage was extended to millions of people, it meant we had finally decided, as a nation, that health care is a right for all and not a privilege for the few.
Republican leaders in Congress believe the opposite. And if they take that peace of mind away, they’ll have to look Americans in the eye and explain to them that they have to start worrying again.
Last week, Vice President Pence told the National Governors Association that the GOP health-care bill currently being debated in the Senate “strengthens and secures Medicaid for the neediest in our society.” Respectfully, that’s simply not the case. Their bill tries to deal with opioid addiction on the cheap, eviscerates the ACA’s Medicaid expansion and guts the ACA’s promise that care like maternity and mental health and substance-use disorder services must be part of any viable health coverage system. They want to drag us back to a time — not all that long ago — when Americans could be denied basic health care because they were unable to afford it. That’s the reality of where we are today and it’s enough to make your blood boil.
Now, I hear some folks say: But hospitals don’t turn anyone away from the emergency room. Before the Affordable Care Act, though, hospitals provided about $40 billion each year in uncompensated care. People who didn’t have health insurance or couldn’t cover their co-pays were putting off needed medical care and skipping out on preventive care altogether. That’s not a sustainable model, and we’re better than that. A health-care system built around emergency room visits isn’t a health-care system at all.
The ACA isn’t perfect, but the choices we made when designing the law flowed from a commitment to provide the best possible care to the most people. Compare that to Republican proposals, which the nonpartisan Congressional Budget Office has saidwill mean more than 20 million fewer people will have health coverage by 2026, and millions more will no longer have the same protections provided by the ACA.
Here are just some of the people who could lose access to care if congressional Republicans get their way:
More than 70 million Americans rely on Medicaid, including close to 2 millionveterans. Medicaid, including the Children’s Health Insurance Program, covers 39 percent of children in America, 49 percent of all births, 35 percent of Americans with disabilities and 64 percent of nursing home residents, around seven in ten of whom are women. Rural hospitals would be hit especially hard by proposed cuts because they’ve benefitted most from the Medicaid expansion that has meant fewer uninsured requiring uncompensated care, and yet Senate Republican leadership is looking to cut Medicaid by about three-quarters of a trillion dollars.
Slashing the Medicaid expansion would affect over a million Americans who’ve used it to cover mental health and substance-use disorder treatment. The original Senate bill proposed spending $2 billion to address the opioid epidemic — a drop in the bucket when it comes to addressing a crisis that is ravaging communities and ripping the heart out of our country.
After facing an outcry, Senate Majority Leader Mitch McConnell increased that to $45 billion. But my longtime Senate colleague is, I believe, missing the point. You can’t take away comprehensive health insurance from people struggling with opioid addiction and then just throw $2 billion or, for that matter, $45 billion their way for treatment. Experts say we need closer to $183 billion over 10 years to provide those on Medicaid with treatment for addiction and to provide care for other illnesses that often affect those addicted to opioids. Americans in communities affected by this epidemic understand firsthand that the status quo is grossly inadequate. We must do more to address this crisis, not less.
A middle-class family getting health insurance through a small employer could lose coverage for maternity care, mental health care or substance-use disorder services. Under the Senate’s bill, they would bear the burden of paying for these services out-of-pocket or having to go without them.
The new bill would create two individual insurance markets: One in which insurers must cover people with preexisting conditions, and one in which they don’t. And you don’t need a Ph.D. in economics to guess what would happen next: Healthier, younger people would flock to the less expensive, unregulated market. Those remaining in the regulated market will be older and sicker, and their premiums would increase to the point that they could be left with an option for insurance that exists on paper, but not in practice.
If you’re young and healthy, maybe this bill means that you’d pay lower premiums. But the thing about life is that if you’re lucky, eventually you grow old, and, in the meantime, you don’t know what will happen next. In the blink of an eye, or in one phone call from a doctor, your outlook may change. And if, God forbid, you find yourself in that position one day, I hope we still have the ACA in place so you can have the peace of mind that comes with knowing that no matter what, you can still get affordable care.Senator McConnell says there’s still time to make changes to the bill before it gets to the Senate floor. But it shouldn’t even get there, because his bill can’t be fixed. By denying that all Americans have a right to health care, it’s fundamentally flawed. And Republicans are underestimating the American people if they think a few changes to the bill here or there will convince us that this bill is anything but a big step backward.
In my 36 years as a senator, I saw my colleagues take plenty of hard votes. This just isn’t one of them. If Republican leadership wants to improve the ACA, let’s first come to an agreement that everyone should have health coverage. Then, based on that premise, let’s have a debate about how best to improve care and reduce costs. Let’s again make the commitment that in America, health care is a right for all, not a privilege for the wealthy.
On health care, history is watching. And it’s watching four senators in particular.
by E.J.Dionne - Washington Post - July 17, 2017
Over the past century, there has been a characteristic American cycle of response to far-reaching social reforms.
When the breakthroughs are first proposed, conservatives fight them with a devout passion, warning that the measures on offer would move the nation toward socialism and perdition. Then, over time, the disastrous consequences never materialize, the reforms prove their worth, and Americans come to see the once-new benefits as rights.
This was certainly the case with two of our nation’s greatest social programs.
In the debate over Franklin D. Roosevelt’s plan for Social Security, Rep. James Wadsworth said the system would make government “so vast, so powerful as to threaten the integrity of our institutions and to pull the pillars of the temple down upon the heads of our descendants.”
Rep. John Taber, like Wadsworth a conservative Republican from New York, was equally apocalyptic: “Never in the history of the world has any measure been brought here so insidiously designed as to prevent business recovery, to enslave workers and to prevent any possibility of the employers providing work for the people.”
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Sens. Collins, Paul criticize revised Senate health-care bill
Sens. Susan Collins (R-Maine) and Rand Paul (R-Ky.) on July 16 explained why they continue to oppose a Senate bill aiming to revise the Affordable Care Act. (Bastien Inzaurralde/The Washington Post)
As it happened, the pillars of the temple remained firmly in place, and so today does Social Security.
The story is the same with Medicare. An eloquent conservative actor named Ronald Reagan warned in 1961 that if the plan passed, “behind it will come other federal programs that will invade every area of freedom as we have known it in this country.”
Reagan saw only darkness ahead if Americans did not rise up against this scheme. “One of these days, you and I are going to spend our sunset years telling our children, and our children’s children, what it once was like in America when men were free.”
The Gipper also offered this: “It’s very easy to disguise a medical program as a humanitarian project. Most people are a little reluctant to oppose anything that suggests medical care for people who possibly can’t afford it.”
As well they should be, and this is why the coming weeks will be among the most important in the history of American social policy. A handful of Republican senators will decide whether the Affordable Care Act (ACA) will remain part of the fabric of our nation’s life, the latest in a long series of steps toward a more humane society.
The Obamacare repeal bill unveiled last week by Senate Republican leader Mitch McConnell after the failure of his first try is, if anything, worse than the original, primarily because its insurance “reforms” (really a rollback of the ACA’s actual reforms protecting those with preexisting conditions and limiting premiums for older Americans) would render coverage unaffordable for millions of citizens who face the most severe health problems.
In the meantime, the bill keeps the worst aspect of the earlier GOP draft in place. Sen. Susan Collins, a Maine Republican, bravely and correctly identified the “still deep cuts to Medicaid” as the central reason this bill deserves to die. Because Sen. Rand Paul (R-Ky.) also said he would vote no and the 48 members of the Democratic caucus are prepared to oppose McConnell’s bill, only one more Republican vote is needed to continue our nation’s painfully slow but necessary march toward guaranteeing every American health insurance.
Here’s a suggestion to Dean Heller, Rob Portman, Shelley Moore Capito and Lisa Murkowski, Republican senators who should feel morally bound to vote no. Like Collins, they have spoken strongly against damaging cuts to Medicaid. If they announced their opposition together, they would lessen the political risk of standing alone and create a critical mass of GOP senators who could join Collins in her declared intention of working with Democrats “to fix flaws” in the ACA.
That’s the other thing about enduring social reforms: They have lasted not only because they demonstrated their value, but also because Congress improved them over the years. Social Security, for example, is better because of changes made in the 1950s and 1970s.
To oppose this wretched Senate repeal bill thus does not mean declaring that the ACA is perfect. (Exempt the Ten Commandments if you will, but no legislation is perfect.) It means accepting that Obamacare moved the nation in the right direction — and, by the way, used some conservative ideas to do it.
We can be grateful that earlier generations ignored those who regularly equated social advances with oppression. As Reagan might say, our children and our children’s children will ask whether we shared the courage of our forebears.
Today’s conservatives clearly don’t understand government’s role as an insurer. Here’s why.
by Jared Bernstein - Washington Post - July 17, 2017
A lot of what key Republicans say in the health-care debate (and other debates too, such as Social Security) suggests that they fundamentally fail to understand the concept of insurance.
For example, Vice President Pence was quoted over the weekend criticizing Obamacare’s Medicaid expansion for putting “far too many able-bodied adults” on the program. Sen. Ted Cruz (R-Tex.) argued that his ill-considered amendment to the Senate replacement plan — the one that allows insurers to offer bare-bones plans that bifurcate the risk pool and thus invoke the classic insurance “death spiral” — “ensures consumers have the freedom to choose among more affordable plans that are tailored to their individual health-care needs.” A few months ago, House Speaker Paul D. Ryan (R-Wis.) argued that Obamacare’s fatal structural flaw was that it was set up so that the healthy would subsidize the sick.
That’s kind of a description about how insurance works. Pence’s point also makes no sense in this context: We want “able-bodied” people in the Medicaid risk pool. And as noted, Cruz invokes “adverse selection” by allowing healthy people to self-select into cheap plans, leaving less healthy and thus more expensive people to be covered in plans with much higher premiums. These expenses lead the least unhealthy in this sicker pool to take their chances elsewhere, which only exacerbates the problem. Based on this logic, two major health insurance lobbies just announced their opposition to the Senate plan, calling the Cruz amendment “unworkable,” and “saying it would send premiums skyrocketing for those with preexisting conditions and leave millions more people uninsured.”
What’s going on here?
Two things, at least. First, I do think today’s conservatives are uniquely uneducated when it comes to the role of government in mitigating risk. But second, the old Upton Sinclair insight about people being paid not to understand something is also very much in play. Were they to understand the practical implications of their positions, any replacement plan for Obamacare would end up looking pretty much like Obamacare. They’d be forced to strengthen Social Security and Medicare, and they’d have to stop rolling back financial market oversight.
If you look at the health-care systems around the world that fully cover their populations while spending far less than we do with similar, if not better, outcomes, you see many commonalities in their architectures. To manage costs (and avoid adverse selection), there must be a robust risk pool. That, in turn, requires a mandate to participate, with penalties for failing to do so. But some people, by dint of their low incomes, won’t be able to meet the mandate, so they’ll need subsidies.
The government does not have to be the sole insurer, as in single payer systems. Some countries, like Switzerland, Germany, and Singapore, keep private insurers in the mix, but the prices they set and the scope of the coverage they offer is heavily regulated by the government.
Where’s the market failure such that the government must play such a dominant role in health care? That’s actually a simple question. If you’re hungry, we don’t have to feed you. But if you’re sick, you must be treated. That right there takes health care out of the market and gives rise to the large public footprint in health care in all advanced economies.
But that’s just part of the market failure. There are also huge informational problems, meaning very few of us are doctors and none of us know the future. Look back at that Cruz quote above, to the part about how individuals should be able to choose plans tailored to their needs. None of us know what our needs will be, which is why we need insurance in the first place. Of course, I may think I’m invincible, and thus purchase “junk insurance.” But if I’m wrong, and some people will definitely get this wrong, then somebody’s going to end up paying for my care.
That’s also why the Ryan and Pence quotes don’t make sense. It may be less that they don’t understand insurance and more that they don’t think low-income able-bodied or less-healthy people deserve government support to buy coverage. I disagree, but because of health care’s unique nonmarket characteristics, the key point is that when poor and moderate-income uncovered people get sick the rest of us will pay for their coverage through an increase of “uncompensated care,” a cost that Obamacare significantly drove down and that the Urban Institute assures us will soar once again under the repeal plans currently in play.
Similar dynamics exist for insuring against poverty in old age. Social Security reduces elderly poverty from over 40 to below 10 percent with administrative costs of less than 1 percent of benefits, something no privatized system could so efficiently accomplish. Same with regulating financial markets so that they don’t blow up the economy every few years at great cost to the rest of us.
The fact is that none of those functions are consistent with today’s conservatives’ brand, which is all about shrinking government and cutting taxes on the wealthy. Or, as David Remnick recently put it, “liberating the wealthy from their tax obligations or liberating the poor from their health care.” Their funders pay today’s conservatives not to understand the critical insurance role of government. As the health insurance debate reveals, they’re getting their money’s worth.
How hospitals got richer off Obamacare
After fending off challenges to their tax-exempt status, the biggest hospitals boosted revenue while cutting charity care.
by Dan Diamond - Politico - July 17, 2017
A decade after the nation’s top hospitals used all their advertising and lobbying clout to keep their tax-exempt status, pointing to their vast givebacks to their communities, they have seen their revenue soar while cutting back on the very givebacks they were touting, according to a POLITICO analysis.
Hospitals’ behavior in the years since the Affordable Care Act provided them with more than 20 million more paying customers offers a window into the debate over winners and losers surrounding this year’s efforts to replace the ACA. It also puts a sharper focus on the role played by the nation’s teaching hospitals – storied international institutions that have grown and flowered under the ACA, while sometimes neglecting the needy neighborhoods that surround them.
And it reveals, for the first time, the extent of the hospitals’ behind-the-scenes efforts to maintain tax breaks that provide them with billions of dollars in extra income, while costing their communities hundreds of millions of dollars in local taxes.
One example of the hospitals’ efforts to remain tax-free: the soaring, minutelong TV commercial that popped up on stations across Western Pennsylvania in 2009 by the University of Pittsburgh Medical Center, the area’s flagship hospital and one of the largest teaching hospitals in the country.
“UPMC is proud to be part of our city’s past, present and, more importantly, its future,” the narrator enthuses, as the camera pans around Pittsburgh scenes of priests, grocery-store workers, even a ballet dancer before coming to rest on the sprawling medical campus — one of the five largest in the world.
At the time, Congress was considering not only whether to remove tax-exempt status for teaching hospitals, a cause of Sen. Chuck Grassley (R-Iowa), but also whether to add requirements forcing hospitals to do more for the low-income, urban communities in which so many of the top hospitals are located. And local leaders in many states were attempting to claw back billions of dollars in forgone tax revenue — a battle that would soon break out between UPMC and the mayor of Pittsburgh, too.
But the hospitals, aided by their good-neighbor initiative, prevailed. The ACA did nothing more to force the hospitals to share their revenue with their neighbors or taxpayers generally.
The result, POLITICO’s investigation shows, is that the nation’s top seven hospitals as ranked by U.S. News & World Report collected more than $33.9 billion in total operating revenue in 2015, the last year for which data was available, up from $29.4 billion in 2013, before the ACA took full effect, according to their own financial statements and state reports. But their spending on direct charity care — the free treatment for low-income patients — dwindled from $414 million in 2013 to $272 million in 2015.
To put that another way: The top seven hospitals’ combined revenue went up by $4.5 billion per year after the ACA’s coverage expansions kicked in, a 15 percent jump in two years. Meanwhile, their charity care — already less than 2 percent of revenue — fell by almost $150 million per year, a 35 percent plunge over the same period.
Revenue up, charity care down
While operating revenue increased under Obamacare for not-for-profit hospitals like the Cleveland Clinic and UCLA Medical Center, the amount of charity health care they provided fell. For example, while UCLA saw operating revenue grow by more than $300 million between 2013 and 2015, charity care fell from almost $20 million to about $5 million.
Hospitals justify the billions of dollars they receive in federal and state tax breaks through a nearly 50-year-old federal regulation that simply asks them to prove they’re serving the community. (Some states have taken a stricter approach for their tax breaks.) And while hospitals acknowledge that their charity care spending has fallen — pointing to the fact that a record number of Americans are now insured under the ACA — some leaders say the trend could reverse itself if the ACA is repealed.
Hospitals also defend their tax-exempt status by pointing to their total community benefit spending, a roll-up number that can include free screenings and local investments but also less direct contributions, like staff education or hospitals’ internal metrics for when they say there is a gap between what they charge for services and what Medicare or Medicaid pays them.
But in many cases, top hospitals’ community benefit spending has remained flat or declined since the ACA took effect, too. For example, Massachusetts General Hospital in Boston, which has been ranked as the best hospital in the world, spent $53.8 million on community benefits in 2015, down from $62.1 million in 2013, even as its total annual revenue went up by more than $200 million.
Advocates say that not-for-profit hospitals are failing in their responsibilities to their communities, which are beset by rising rates of opioid addiction, diabetes, asthma and other serious but treatable conditions.
“Are they doing enough? I can give you a one-word answer: No,” said Charles Idelson of National Nurses United, a labor union that’s fought with hospitals over their community contributions. “So many of these hospital chains, their clear priority is their budgetary goals or their profit margin.”
A record profit margin
Obamacare may have been a mixed blessing for those seeking coverage through the state exchanges, some of which have seen double-digit annual premium hikes, but it’s been a clear boon for the nation’s hospitals.
Multiple studies have linked the ACA’s coverage expansion to improved financial performance, with one analysis finding that hospitals’ profit margins went up by 25 percent in states that expanded Medicaid in 2014. Overall, the industry boasted an 8.3 percent profit margin that year, according to the most recent figures published by the American Hospital Association. That’s the highest performance on record — more than triple the industry’s 2.6 percent profit margin in 2008, amid the recession and before the Obama administration began pushing its health care reforms — and it’s only invited scrutiny from advocates and researchers who say that it’s a sign the system is broken.
Gerard Anderson, a health care economist at Johns Hopkins University, co-authored a study in 2016 that found 7 of the 10 most profitable hospitals in the United States are technically not-for-profit hospitals. “The taxing system may not be working properly if nonprofit hospitals are making a lot of profit and not necessarily putting it back into the community,” Anderson said at the time.
Hospitals dispute that Obamacare has been the engine of their recent success. “We would not attribute our solid financial performance to ACA,” said a spokesperson for the Mayo Clinic — the top-ranked hospital in the US News rankings, which cleared $1 billion in combined operating income in 2015 and 2016. “It’s a result of a fiscal discipline, focus on creating efficiencies, generous philanthropic donations, as well as research funding from NIH and revenue created through our commercialization efforts.”
And they add that looking at profits doesn’t tell the full story, especially because they’re funneling those dollars back in the form of jobs and other civic benefits. For instance, hospitals are the largest employer in many major cities and most congressional districts.
Johns Hopkins Health System, for instance, said it was responsiblefor more than 22,000 jobs in Baltimore City — and nearly $1.8 billion in total economic impact.
But the job gains don’t necessarily help their close neighbors – or improve their health. Anderson, for one, was skeptical that big hospital revenues translate to community improvements. Instead, they often lead to multimillion dollar renovations, more executive compensation and other big-ticket spending items that don’t actually benefit nearby residents.
“A lot of the communities where these hospitals are located are having financial difficulties,” he said. “The hospitals, which are making money, aren’t contributing to the financial reserves of that community. They are obviously employing people, but they are earning substantial profits and not paying any of those profits to the communities.”
A bizarre contrast
It’s set up a bizarre contrast. Many U.S. cities boast hospitals that are among the best in the world, but the communities around those hospitals might as well be the Third World.
Walk five minutes off the Hopkins campus in downtown Baltimore and you’ll arrive at the city’s Madison-East End neighborhood, where the poverty is both visible — cracked sidewalks, empty storefronts and more than three times as many vacant lots per house than in the rest of the city — but also silently killing residents. The death rate in the neighborhood is 30 percent greater than the rest of the city and mortality from cancer, stroke and heart disease is more than twice as high.
One striking figure: The life expectancy rate in Madison-East End is less than 69 years. That’s lower than the life expectancy in impoverished countries like Bangladesh, Turkmenistan and North Korea. It’s also subtly at odds with the message Hopkins sells to the rich patients it courts from around the world, encouraging them to come to a hospital that’s akin to a health mecca, even if it’s actually located in a rundown area.
“Poor communities around hospitals tend to lack simple conveniences, like grocery stores stocked with healthy, inexpensive food or even places to play or exercise outside safely,” says Elizabeth Bradley, president of Vassar College and co-author of “The American Health Care Paradox,” which offers reams of research on how living in such neighborhoods leads to worse health and social instability. “The paradox is that we focus on and invest in areas like hospital care when social determinants matter so much more,” she says.
nd for many residents, a vicious cycle begins when they’re young, as Bradley and others have chronicled; many of these neighborhoods have high crime rates, and exposure to violence increases violent behavior among children. It’s also hard for them to escape their circumstances: One 23-year-long study of Baltimore schoolchildren found that, as they grew up, the children born into low-income families generally stayed in the same socioeconomic bracket as their parents.
The nation’s top hospitals do invest in these communities; Hopkins, for example, offers intern training programs and free health education among its community investments. Not-for-profit hospitals are encouraged to publicize these initiatives, so their tax exemptions are not lost.
“It is essential that hospitals voluntarily, publicly and proactively report to their communities on the full value of benefits they provide,” the American Hospital Association instructed its members in 2006, after a series of regulators and Congress began reviewing hospitals’ tax-exempt status. The ACA further codified requirements that tax-exempt hospitals must report on their community benefit activities.
But based on their own self-reports, these hospitals clearly could be doing more. A POLITICO review of community benefit activities reported by these top hospitals found that the organizations counted activities like sponsoring races and hosting lectures toward their community benefit spending. Many of the dollars that hospitals report as “community benefit” are more accurately an accounting trick — the shortfall that hospitals incur when Medicare or Medicaid reimburses the hospital at less than the organization’s price.
Idelson of National Nurses United says this squares with his own organization’s reviews, which illustrate that hospitals approach these investments as “big businesses,” and community benefit programs are too often “their marketing schemes.”
“Hospital staff are going to a marathon and handing out water bottles, and the hospital is calling it a community benefit,” he added. “To us, a community benefit is something that actually improves the health of a community.”
That’s one reason why civic leaders in Baltimore and beyond say they want to see hospitals spend even more on what’s increasingly known as “population health,” or addressing the social needs of residents so they don’t need to visit the hospital in the first place. But there’s no formal requirement to do so. And because hospitals are such deep-pocketed, long-lasting institutions, they can wait out many would-be reformers.
“How do you [convince] an organization that’s existed for decades when you’re only there for a few years? It’s a challenge,” said Abdul El-Sayed, who served as Detroit’s health director from 2015 to 2017. He’s now running for Michigan governor. El-Sayed worked with hospitals to secure public investments like lead screening — a top-of-mind issue for residents in a city just miles away from Flint — but said he had problems winning further compromises.
Hospitals at war
The struggles of El-Sayed and other state and local leaders illustrate what most reformers already know: The best way to pressure hospitals to do more for their communities is at the federal level.
And the best opportunity came in 2009, while Congress was gearing up for what would become the Affordable Care Act. Already reeling from the recession, not-for-profit hospitals were loath to pay an additional $13 billion in taxes if their status changed.
But there were some strong arguments in favor of it, at least politically. Major teaching hospitals kept getting caught chasing dollars from patients who were too poor to pay, such as when The Wall Street Journal detailed how the prestigious Yale-New Haven Hospital was putting massive liens on poor patients and their families — including a 77-year-old dry cleaner slowly paying off the thousands of dollars in interest from his wife’s cancer treatment. She had died 20 years earlier.
Lawmakers led by Grassley, the powerful Iowa Republican, felt the best response would be for the federal government to tighten the loophole that let those high-profile hospitals — and nearly 3,000 others — essentially self-define whether they deserved to be tax-exempt.
So hospitals went to war.
The inside story of how hospital tax exemptions factored into the ACA negotiations was widely overlooked at the time and, until now, mostly untold.
But it begins with the 83-year-old Grassley, the senator who remains Congress’ most reliable investigator of charities and their uncharitable behaviors, more than a dozen current and former Senate staffers told POLITICO. And he might never have gotten involved if not for the American Red Cross — and the Sept. 11, 2001, terror attacks.
As The New York Times and others reported in 2002, the Red Cross received nearly a billion dollars in donations in the seven months after the attacks. But Red Cross executives decided against offering those contributions entirely as relief, electing to bank almost $400 million rather than spend it right away. That didn’t sit well with Grassley, then the ranking member of the Senate Finance Committee, who led an investigation into the group’s operations, accused its chief of trying to mislead Congress and ultimately pushed to restructure the Red Cross board through legislation.
(To this day, Grassley is still skeptical of the Red Cross. In June 2016, he released a 309-page report concluding that the Red Cross mismanaged its Haiti relief effort, and in March he reintroducedlegislation to increase transparency of the organization.)
The battle with the Red Cross began a years-long pattern. A well-regarded nonprofit would get attention for mishandling its funds. A newspaper would write it up. And Grassley would spring into action with detailed requests and subpoenas, ultimately taking him into conflict with Christian ministries, nature conservatories and even the United Way.
He’s a “good government guy,” said former Sen. Max Baucus (D-Mont.), who alternated with Grassley as the Finance Committee chairman or ranking member for years and teamed up on investigations into charitable organizations. Their partnership was intended to transcend partisanship, both men say. (“If Chuck asks you something, it’s like I asked you for it,” then-chairman Baucus once told officials who were dragging their heels on responding to a Grassley request.)
“We didn’t have a subcommittee on nonprofits, but if we did, Grassley would have been the chair,” said Russ Sullivan, who served as Baucus’ top aide.
By 2005, Grassley was chairman of the Finance Committee himself and had found a major target for his investigations: The nation’s 3,000 or so not-for-profit hospitals, which had spent decades inching away from their original charitable missions and increasingly acting like big businesses.
“Hospitals were suing patients who couldn’t pay,” said Theresa Pattara, who was an IRS staffer assigned to the Finance Committee at the time. “It was like trying to get blood from a stone.”
The IRS had once required that tax-exempt hospitals provide free or heavily discounted care to poor patients. But after the creation of Medicare and Medicaid, which dramatically reduced the number of indigent patients, hospitals in 1969 got the agency to relax its rules and allow them to keep their valuable tax exemptions if they provided “community benefit,” a more expansive definition that included charity care but also other activities that advanced patients’ health. Many hospitals included new construction, capital expenditures, even executive perks as community benefits.
It was a nebulous standard that galled Grassley, who led a multiyear investigation into the behavior of 10 hospitals and health systems, including the Cleveland Clinic and New York-Presbyterian Hospital, and convened a series of embarrassing hearings for the health care industry. At one September 2006 hearing, he hinted that core practices — from executive compensation to board structure — needed to be overhauled.
“Some nonprofit hospital executives enjoy the best hotels and great meals, all subsidized by the taxpayer,” Grassley said, as health care leaders nervously looked on. “I find it especially troubling that executive after executive is having country club dues paid for by nonprofit hospitals.”
The hospital industry fought back. Major systems took out ad campaigns touting their charitable work. Hospitals quickly moved to voluntarily disclose their community benefit spending and began issuing new annual reports. The powerful American Hospital Association mobilized its lobbyists to try and win over congressmen. But Grassley kept up the pressure.
“Grassley would have senators coming up and saying, ‘why are you bothering the only hospital in my district?’” Pattara recalled. But the Iowa senator wouldn’t back down, having memorized reams of statistics — like executives’ million-dollar salaries — as a counterargument. “Grassley would say, ‘do you know what they’re paying their CEO?’ and the congressmen would be taken aback,” Pattara added. “I loved Grassley for that.”
Grassley’s inquiries and mounting public scrutiny invited more investigations. A Joint Committee on Taxation report, requested by then-House Ways and Means Committee Chairman Bill Thomas, concluded that the hospital industry in 2002 got $12.6 billion in tax savings, as it not only escaped income, sales, and property taxes but also used tax-exempt debt to finance major projects. The financial benefits for those hospitals were actually even larger; for instance, the figure didn’t include the billions of dollars in tax-free donations that hospitals also received every year.
By 2007, Grassley was openly floating the idea that hospitals must provide at least 5 percent of their revenue in exchange for tax exemption. But aides say this was mostly a negotiating ploy to scare the industry rather than fight for explicit requirements on hospitals to provide charity care or be taxed.
Grassley pushed for reporting requirements instead. The IRS ended up redrawing its Form 990, the document that charitable organizations must submit annually, and adding a new section — Schedule H — that specifically required hospitals to detail their community benefit activities.
Grassley had a few reasons for avoiding more punitive measures on hospitals. One was that he didn’t want to be a Republican who was linked to imposing new taxes, aides say, but rather viewed as a legislator who shined a light on dark sectors. Another was that the committee was mostly relying on anecdotes and its own limited investigation into the $1 trillion industry.
“Ideally, you legislate from facts and data,” says Pattara, who returned to the IRS to work on the new Schedule H addition. “And there wasn’t enough data yet” to call for new legislation to reshape the hospital industry.
Digging in for a battle
Hospitals had escaped the biggest threat: New federal regulations. But they were still worried about a series of local challenges, pushed by state attorney generals after regulators in Illinois in 2003 stripped a pair of hospitals of their property-tax exemptions.
The Cleveland Clinic got caught up in one of those fights after it tried to get exemptions for a pair of satellite offices and local regulators said the buildings weren’t providing necessary charity care. The battle dragged on for more than a decade before Ohio’s Republican tax chief in 2012 reversed the previous Democratic administration’s denial of the property-tax breaks.
For opportunistic state leaders, not-for-profit hospitals represented a chance to make a major statement — and recoup some tax dollars as state revenue was declining. Illinois Attorney General Lisa Madigan pushed a bill in 2006 that would have required hospitals to spend 8 percent of their operating budget on charity care. Attorneys general in Kansas, Minnesota, Ohio and other states also began probing hospitals’ spending and pushing for tougher definitions of community benefit standards.
Hospitals dug in, with the American Hospital Association providing air cover and refining the industry’s messaging. Ads began blanketing state capitols, singing the praises of local teaching hospitals. Health care leaders started to aggressively release reports, touting their spending on community benefits. National organizations emerged to offer crisis communications on how not-for-profits could preserve their status.
In Illinois, the Madigan bill was defeated, as hospitals repeatedly steered lawmakers away from imposing new legislative requirements on their charity care; instead, the state ended up simply convening commissions and offering recommendations. It was a case study in how to derail legislation. The industry “has tremendous clout in [state capital] Springfield and has been able to water down any charity care proposals as to make them meaningless,” James Unland, a hospital consultant, said at the time. A subsequent 2012 law that exempted Illinois hospitals from property taxes if they met certain charitable standards has been tied up in litigation for years.
The regional battles also put not-for-profit hospitals on high alert: If they weren’t careful and proactive, their decades-old property tax breaks could disappear if a local board or school district decided to move against them.
Reason to be confident
Back in Washington in late 2008, Democrats had claimed control of Congress and were readying their health care bill. They were also eyeing how best to negotiate with the health care industry, which had fiercely resisted the Clinton-era health reforms and ultimately helped kill them. This time, Baucus’ team reasoned, they needed to get all the major trade groups to the table — and keep them there.
“We had done this whole analysis of every single sector going into ACA,” said a former Senate aide who helped craft the bill. “What do they have to win? What do they have to lose? What are they most afraid of?”
For hospitals, losing tax-exempt status was on their list of potential pain points, and that gave Democrats a bargaining chip with the influential industry. “As long as they were winning on parts, you could press on the losses,” the aide said.
It also gave Democrats a carrot to try and win over Grassley, as Baucus sought Republican votes in hopes of making his committee’s health care legislation into a bipartisan bill.
Baucus had reason to be confident that his longtime collaborator would support a major health care push. In a plan that hasn’t previously been reported, the two men came close to going to the McCain and Obama campaigns in late 2008 in an attempt to secure a commitment — from whoever was president — to work on health reform in 2009. The idea harkened back to 2001, when Baucus crossed the aisle to work on tax reform with Grassley after the previous year’s controversial presidential election.
The two senators ultimately didn’t make their joint pitch to the McCain and Obama camps. “We just couldn’t pull the trigger,” said Sullivan, Baucus’ key aide. But it laid the groundwork for the negotiations to come. “Baucus was convinced that Grassley would be willing to join him on health care legislation,” Sullivan added.
Before the ACA, “we weren’t even contemplating enacting anything around tax-exempt hospitals,” said Pattara, who had rejoined the Finance Committee as Republicans’ tax counsel in 2008.
In early 2009, Democrats’ tactics seemed to be working, as hospitals engaged in negotiations and Grassley expressed support for a health reform compromise. A May 2009 policy paper on proposals to fund the expansion of health coverage — co-authored by Baucus and Grassley — floated a requirement that hospitals “provide a minimum annual level of charitable patient care.”
Early drafts of the ACA legislation specifically included new restrictions on whether hospitals could qualify as tax exempt, as a give to Grassley. But it wasn’t a high priority for Baucus and other Democrats.
“The things that the Democrats were focused on were mostly about [insurance] coverage and subsidies,” a former aide said. “Everybody had a pet project in there — and they paid attention to their pet project.”
On the other side of the table, there was a schism between the hospital lobbyists. The Catholic Health Association, which was working with the Obama administration on the reform bill, explicitly defined community benefit as services rendered. But the American Hospital Association, which was more combative in its negotiations around the bill, took a harder stance on tax exemptions: It wanted a more expansive definition of community benefit that included patients’ bad debt and even Medicare- and Medicaid-related underpayments.
Meanwhile, the Federation of American Hospitals — the for-profit lobbying group — had produced evidence that its members, which paid taxes, provided just as much charity care as their not-for-profit peers.
The industry’s inability to align its message hampered its own negotiating position. But lobbyists for the Catholic Health Association and the American Hospital Association agreed: They couldn’t sign off on any measure that revoked the exemption. It was too valuable. Large health systems were getting tens of millions of dollars in annual benefits from their tax exemptions.
So they hammered out a compromise: Hospitals would need to conduct a community health needs assessment every three years and report their findings to the IRS. The findings would need to incorporate broad feedback from the hospitals’ constituents, be publicized “widely” and lead to changes as necessary. The assessments would help the IRS determine whether tax exemptions were warranted — and if hospitals didn’t comply, they’d have to pay a $50,000 excise tax. The bill also formalized a series of changes to hospital policies, like requiring them to publicize their financial assistance rules.
All things considered, the proposal had relatively little bite, and the rest of the inducements offered by negotiators — like the health law’s planned coverage expansion — were quite generous to the industry. The hospitals publicly threw their support behind the ACA in July 2009.
“Their best play [was] watering it down as much as possible and kicking it to Treasury to make it difficult to implement,” a former aide said, referencing the new community-needs reviews.
Hospital lobbyists agree: Their strategy was delaying and focusing on bigger-ticket items, like near-term changes to Medicare payments. “We knew we couldn’t fight the idea of more transparency,” said one lobbyist who’s still employed by the industry. “We picked our battles and hoped Grassley wouldn’t make too much noise.”
But Grassley had his own troubles. Besieged by protesters at town halls and attacked by tea party activists in August, the Iowa senator ultimately signaled he couldn’t support the ACA legislation. The hospital industry stayed mum as Grassley dropped out.
“Once Grassley was not part of it, they didn’t come back to us and say, OK, now that he’s not on board, we want to take this out,” a former Democratic aide said.
Hospital lobbyists say that was a deliberate decision. “The previous years had made clear, this was a losing issue for us,” said a lobbyist. “The less we talked about tax exemptions, the better.”
Sullivan, Baucus’ key aide, helped track the provision and made sure it remained in the final bill.
Once again, the hospital industry had dodged a major challenge to its tax exemptions — perhaps the most significant in 40 years.
Who should be a nonprofit?
Rolling out the new charity assessments and vetting hospitals fell to the IRS, which spent several years working on the new 501(r) tax section and the ACA’s other tax provisions — the most significant changes to the tax code since Congress’ 1986 tax reform bill.
But the charity reviews forced the IRS into an unusual position, former staffers who worked on implementing the ACA told POLITICO: The agency didn’t really have the experience or expertise to determine whether hospitals should be not-for-profit.
“Using the IRS as an instrument to achieve these important goals … was not the best fit,” said Jason Levitis, who led the Treasury Department’s implementation of the Obamacare regulations. “Why is the IRS the one we want to be [investigating] hospitals’ business about how they’re serving poor people?”
The IRS has largely shied away from battles over revoking tax-exempt status, whether for hospitals or any other organizations. The agency’s most high-profile fight was a two-decade battle over the tax-exempt status of the Scientology organization — which ended after the IRS was overwhelmed with lawsuits and ultimately granted Scientology’s request to be considered as a church.
“It’s not a fight that the IRS wants to have,” said one current staffer, referring to the often politically charged process of removing a group’s tax-exempt status.
Instead, Levitis and others suggest that the administration’s health care agencies should have played a central role in determining if hospitals should be tax exempt. “Think about institutional competence,” Levitis said. “If you were going to choose a government entity … to be policing tax-exempt status, is the IRS [really] the agency with institutional competence — or is there a better option?”
Meanwhile, ACA standards aren’t specific enough to give any agency clear guidance on when to remove tax-exempt status, critics complain.
Community-health-needs assessments are easy to game, experts familiar with the reviews told POLITICO. One consultant told POLITICO about getting a call from executives who were desperate and needed help before submitting their hospital’s assessment; the consultant ended up dictating stock language over the phone, having never even visited the hospital or its community. “They’re a joke,” the consultant said of the ACA standards, arguing that the reviews are mostly a public-relations exercise.
Not a single hospital has lost its tax-exemption because of the new measures in the ACA.
Nonetheless, hospitals have had difficulty complying even with the law’s relatively light requirements. As of an IRS review last year, one-third of surveyed hospitals had been referred for further compliance checks.
The IRS has had its own problems, failing to promptly file required annual reports to Congress about what it’s learned about hospitals’ compliance. That’s been a source of frustration to Grassley, who despite not voting for the ACA, has pestered the agency to fulfill its responsibilities under the law.
It’s also vexed Democrats. “The problem is that the executive branch, first under President Obama and now under President Trump, has not followed through and done its job under the law,” Sullivan said.
A forgotten fight
It’s not clear who, if anyone, will carry the torch for new regulations or even prod the IRS to put more teeth into its oversight. Grassley has moved on to chair the Senate Judiciary Committee, where his jurisdiction is less focused on hospital issues than it was when he led the Finance Committee. Several of his former staffers now work either directly for hospitals or on behalf of them.
One former Grassley aide points out that since the Trump White House is pushing the idea of major tax reforms, there’s an opportunity to review how hospitals’ tax exemptions are treated. But the Republican Party historically has been hesitant to move against hospitals, and the issue of hospitals’ tax-exempt status isn’t on the table in the negotiations to repeal and replace Obamacare.
Meanwhile, many struggling communities are facing a difficult dilemma: If they pressure hospitals to do more for the families and children who live near them, they risk alienating the one local business that’s growing.
For many poorer cities, hospitals have emerged as anchor institutions while sectors like manufacturing die off. The seven top hospitals reviewed by POLITICO employ about 150,000 people on their main campuses. About 35,000 people work for the Mayo Clinic in Rochester, Minnesota, alone — equivalent to about 30 percent of the city’s entire population.
Pressured by city officials, some tax-exempt hospitals have hammered out voluntary contributions, known as payments-in-lieu-of-taxes, or PILOTs, to help offset the cost of city services like police and fire protection. But those payments are usually a small fraction of the actual cost of those services, while the value of hospitals’ tax exemptions continues to rise.
Boston’s Massachusetts General Hospital would have owed more than $55 million last year if it was taxable. Instead, the city requested that the hospital pay less than $7 million through its PILOT program.
National Nurses United has repeatedly pushed legislation that would require hospitals to spend a percentage of their revenue on charity care — a proposal that hospital executives have fought. The bill was closest to breaking through in California, although it’s been met again and again by aggressive lobbying. The legislation “imposes vague and unrealistic standards on nonprofit hospitals,” Martin Gallegos of the California Hospital Association — and a former California assemblyman — warned his former colleagues in the Legislature in 2013.
Top hospitals hope to gain political advantage by strategically maintaining ties with prestigious civic leaders. Hopkins’ board is packed with influential and well-known sons and daughters of Baltimore. The vice chairman was a top CIA official and the CEO of Baltimore-based Alex. Brown & Sons, the nation’s oldest investment banking firm.
Of course, it’s not popular to take on hospitals, which have reputations as lifesavers, and lawmakers haven’t shown interest in a sustained political fight. Luke Ravenstahl, then-mayor of Pittsburgh, launched a lawsuit against UPMC in 2013, seeking tens of millions of dollars that he said the city was losing in taxes. UPMC countersued, and Ravenstahl’s successor dropped the fight in 2014, saying that he wanted to negotiate PILOTs “in good faith” with UPMC and other not-for-profits. Three years later, those negotiations continue without a deal.
But to truly bend health care’s cost curve, policymakers need to get hospitals to do more for their needy neighbors while reining in runaway costs, said Anderson, the Johns Hopkins University economist. For all of the attention on the pharmaceutical sector’s bad actors and practices, just 10 percent of health care spending is on prescription drugs. Instead, more than 30 percent of health care spending goes toward hospitals — amounting to more than $1 trillion per year.
Taxes are one way of capturing those dollars and channeling them into necessary investments. And as long as the Affordable Care Act stays — and even if it goes away — tax-exempt hospitals have a duty to use all of the extra dollars to do more for their communities, advocates and analysts say.
“Tax-exempt hospitals could absolutely be doing more, given what they’re saving,” said Lauren Taylor, a co-author of “The American Health Care Paradox.” “I see a real opportunity for forward-thinking hospitals to make investments in local communities that do two things at once. Smartly invested dollars could both [protect] tax exemptions — and reduce financial risk by improving the community’s health.”
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